Customer Complaints

Customer Complaints

Customer Complaints fall into 2 categories, complaints which are reportable by the Broker Dealer to FINRA through a 4530 report and those that are reportable on a Broker’s license. The regulators have taken a broad view and essentially, if a client puts pen to paper or in most cases sends an email to the broker it is reportable under Rule 4530. Emails such as “I knew this pick was garbage”, “stock is down 2 points WTF?!” and similar emails can be interpreted as “performance complaints” and would be filed under 4530 and potentially result in the regulators requesting more information regarding these “complaints”.

If a customer alleges in an email the following two items 1) a sales practice violation IE: “I did not authorize you to buy that stock” (Unauthorized Trading), and 2) “this trade cost me $6,200” (A loss of more than $5,000), then it is a complaint which is reportable, on the Broker’s U-4 as well as by the Broker Dealer to FINRA under Rule 4530.

Getting Rid of Customer Complaints

Under the old system, complaints that were placed on a broker’s license which did not result in arbitration by the customer were eliminated from the registered representative’s license after 2 years. Under the current rule, these complaints will remain on the broker’s license FOREVER. In order to remove these complaints, a broker needs to file for a hearing to remove the complaint from their license. Such a hearing would give the client who filed the complaint an opportunity to say why the complaint should still stand absent arbitration. The process (if one represents themselves) costs approximately $1,000 along with a one day hearing in front of a FINRA panel. If the panel agrees that the complaint should be removed, the broker would then take such order to a judge for approval and then send the order to FINRA disclosure for removal from their license.

Reasons why the process is tedious

The state Regulators, (State Regulators) need to retain their rights to regulate individuals who wish to conduct licensed activities in their state. As such, they don’t want brokers to simply have the ability to remove potentially damaging information from their records that the public may use in evaluating that broker’s services. Therefore, if a broker goes to a hearing and gets a judge to sign off on the removal of such information, the states have effectively policed the broker and helped to ensure the safety of the investing public from predatory brokers.

For more information or if you have any questions related to your specific situation please go to:

Luxor Financial Group